According to the August consumer expectations survey published by the European Central Bank on the 18th, eurozone consumers' inflation expectations rose slightly, apparently reflecting a renewed sharp surge in fuel prices caused by the intensifying conflict in Iran. The median expectation for inflation over the next 12 months came to 3.0%, up from 2.9% in July. The median expectation for three years ahead rose from 2.7% to 2.9%, and the five-year expectation rose from 2.4% to 2.5%. The ECB carried out its second rate hike of the year last week, and according to sources who spoke to Reuters, policymakers expect further rate increases in the coming months.
ECB survey shows inflation expectations rising and policymakers expect further rate hikes after the second hike of the year, implying higher policy rates.
Rising eurozone inflation expectations and expected further ECB rate hikes push German 10Y yields higher.
